NEW Professional Member Special>>> Save $20 and receive a SHRM tote bag
More companies are recognizing the importance of giving employees the time and space they need to navigate personal loss.
Save $20 on a New Professional Membership and receive a FREE Tote bag when you join SHRM today!
Learn to overcome challenges and meet your 2017 goals through competency-based HR education. Available in-person and virtually.
Expand your influence and learn how to become an effective leader. Join us in Phoenix, AZ | OCTOBER 2 - 4, 2017
Indian tech giant Infosys has agreed to pay the largest immigration fine ever levied by the U.S. government—$34 million—to settle a lawsuit relating to visa fraud, the Justice Department announced on Oct. 30, 2013.
An investigation by the Homeland Security, Justice and State departments found that Infosys illegally placed workers with U.S. clients using inexpensive, easy-to-obtain B-1 visas meant to cover short business visits, instead of the more costly, harder-to-get H-1B work visas issued for longer-term employment. The investigation also revealed that more than 80 percent of Infosys’ I-9 forms for 2010 and 2011 contained substantive violations.
This case is a good cautionary example for businesses that might be tempted to stretch the purpose of the B-1 visa, said Ann Cun, immigration attorney and counsel at LawLogix Group, an I-9, E-Verify and immigration case management solutions provider.
“Aside from the immediate impact on the company, the settlement will have an even greater impact on business immigration practitioners generally,” she said.
“The B-1 in lieu of H-1B category has been challenged in the past, and it may be on life support after this,” predicted Andrew Wilson, a partner in the immigration law firm Serotte Reich Wilson, based in Buffalo, N.Y. The B-1 in lieu of the H-1B is supposed to be for individuals employed abroad, paid abroad and coming to the U.S. to work in an H-1B-caliber role for a temporary project, he explained. “It really has never been completely accepted or liked by consulates or Customs and Border Protection.”
The H-1B cap puts pressure on companies to find alternative visa strategies to meet talent needs in the U.S., Wilson said. However, Indian outsourcing companies are the biggest recipients of the 65,000 H-1B visas offered annually. H-1Bs take several months to process and can cost thousands of dollars per individual. The application process is highly regulated and requires the employer to submit a Labor Condition application that certifies that the salary of the proposed employee will be commensurate with that of similarly employed American workers and that the working conditions of the proposed candidate will not adversely affect the conditions of those similarly employed. There is no cap on B-1 visas, which enable the holders to do activities such as consult with business associates, attend conventions, negotiate contracts and participate in short-term training. The purpose of the B-1, which can be obtained in a matter of days for $160, is not for local employment or labor for hire.
The government’s lawsuit alleges that Infosys “knowingly and unlawfully used B-1 visa holders to perform skilled labor in order to fill positions in the United States for employment that would otherwise be performed by United States citizens or require legitimate H-1B visa holders, for the purposes of increasing profits, minimizing costs of securing visas, increasing flexibility of employee movement, obtaining an unfair advantage over competitors, and avoiding tax liabilities.”
Investigators also charged that the tech company told B-1 visa holders how to deceive U.S. consular officials and Customs and Border Protection officers, including giving them specific instructions to avoid certain terminology and contract terms and to use misleading job titles.
The visa-fraud investigation began in February 2011, after Infosys employee Jack Palmer sued the company for harassment and breach of contract. Palmer alleged that Infosys retaliated against him after he raised concerns that it may have violated immigration laws.
According to Palmer’s complaint, he said he attended meetings where company officials discussed the need to get around H-1B limitations and where he was asked to prepare letters in support of B-1 applications stating “the employee was coming to the United States for meetings, rather than to work at a job.”
In a news statement, Infosys denied the claims of systemic visa fraud, misuse of visas, and immigration abuse. The company also said there are no limitations on its eligibility for federal contracts or access to U.S. visa programs as a result of the settlement.
The settlement is unprecedented and is bound to shape the immigration compliance area for a long time, observed Anantha Paruthipattu, principal attorney at Paruthipattu Law Firm, based in Herndon, Va. “As the Infosys settlement dramatically showcases, anyone using the B-1 visa must be prepared to thoroughly document its legitimate use. Failure to diligently implement appropriate internal processes that guard against the potential for visa abuse is a tragedy waiting to happen.” The main lesson for IT outsourcing companies is that they will continue to find it challenging to match U.S. immigration solutions to their business plans, said Wilson, adding that businesses should expect serious visa scrutiny going forward and the possible elimination of the B-1 in lieu of H-1B category.
“The takeaway for everyone else is that compliance with employment verification rules is important and that enforcement is on the rise,” Wilson said. “All employers, no matter the industry or size, need to take the time to set up proper I-9 and verification procedures. There are more I-9 audits conducted now, and the cost of proper compliance now is much less than the liability and costs of violations later.”
Calls for Reform
“Hopefully, policymakers and journalists don’t draw the conclusion that the system works because Infosys has settled,” said Ron Hira, associate professor and acting chair of the department of public policy at the Rochester Institute of Technology.
“Instead, they should see this for what it is: one small indication of the vast extent to which firms are exploiting loopholes in the visa programs to bring in cheaper foreign workers to displace and undercut American workers,” he noted. “And most of the exploitation is perfectly legal. That’s why Congress needs to scrutinize and reform the H-1B and L-1 visa programs immediately.”
The issue of whether foreign workers are displacing qualified Americans was debated during the congressional wrangling over comprehensive immigration reform earlier this year.
“Legislators who have been critical of the H-1B process for alleged abuse and fraud will now have another visa on which to focus their criticisms,” said Cun. “Although legislation proposed at restricting or curtailing immigration visas has not been met with much success in Congress, the sentiment that fraud is rampant will likely put immigration and consular adjudicators on alert.”
The Senate’s comprehensive immigration reform legislation proposes almost doubling the number of H-1Bs but includes restrictions that would make it harder for outsourcing companies such as Infosys, Cognizant Technology Solutions Corp., Wipro Ltd. and Tata Consultancy Services Ltd. (the biggest users of H1-B visas) to use them.
If a company has more than 75 percent of its U.S.-based employees on H-1B visas, it will be unable to apply for more. That covers most Indian outsourcing companies, according to U.S. Citizenship and Immigration Services data.
The bill calls for increasing the cost of applying for H-1Bs and stipulates that no company with more than 15 percent of its U.S. staff on H-1B visas can place those employees at client sites.
Even with these restrictions, Hira pointed out that the Senate bill does not close all the loopholes in the H-1B and L-1 visa programs.
“I think this absolutely will affect the comprehensive immigration reform discussion,” said Wilson. “Infosys will be used as the poster child for what some believe is wrong with our current immigration system. It will be used as an example that we need to tighten up compliance and rules, as opposed to open more doors to foreign talent.”
Roy Maurer is an online editor/manager for SHRM.
Follow him at @SHRMRoy
SHRM Online Global HR page
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Choose from dozens of free webcasts on the most timely HR topics.
SHRM’s HR Vendor Directory contains over 3,200 companies